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The tide turns: Mexican retailers will benefit from immigration zeroing out

Improvements in education and a strong job market have brought a change in the long-standing labor dynamic between the United States and Mexico.

Market shopping in Oaxaca

President Felipe Calderon said last week that two-decades after the signing of the North American Free Trade Agreement, the net migration between the countries has fallen to zero.

Restrictive immigration policies in the U.S. and a strong economy down south may benefit retailers in Mexico and create higher labor costs for some sectors in the United States.

Companies with significant operations selling to the Mexican market, but also benefiting from increasing spending power in the United States, stand to see the best of both worlds. With a valuation of 15 times trailing earnings, even after falling 2.1% over the last year, shares of the iShares MSCI Mexico Investable Market (EWW, quote) are still relatively more expensive than stocks in the S&P500.

America Movil (AMX, quote) may see some relief on less uncertainty over regulatory risks. Regulators have voted on a $1 billion fine for the company’s Telcel subsidiary which controls 70% of the mobile market in Mexico but the ruling has not yet been made public.

Cofeco, the federal competition commission, brought the action against the company last year after charging that Telcel was using anti-competitive tactics and charging excessive prices. The shares are down 3.9% over the last year and trade for 14.7 times trailing earnings.

Fomento Economico Mexicano (FMX, quote) produces and distributes beer and non-alcoholic beverages, including Coca-Cola, throughout Mexico and Latin America. The shares are priced fairly high at 25.3 times trailing earnings after having risen 30.3% over the last year.

Grupo Televisa (TV, quote) is the largest media conglomerate company in the Spanish-speaking world with operations in Mexico, the United States and internationally. The shares jumped over 4% on the first quarter earnings release as revenue increased 15% and net income almost doubled from a year earlier.

The company’s shares are down just over 6% over the last year but still trade at a relatively expensive 24.6 times trailing earnings.